The money laundering scandal and costs associated with the bank Royal Commission have scythed $575 million off Commonwealth Bank’s first half profit.
The bank reported a first half profit of $4.9 billion, an increase of 1.2 per cent on the previous corresponding period.
Its cash profit — the measure preferred by the banks and studied by the market — came in at $4.73 billion.
That was down almost 2 per cent on last year and well short of expectations of a record result in excess of $5 billion.
The result was dragged down by a charge of $375 million the bank said it had set aside for an expected penalty relating to alleged contraventions of Anti-Money Laundering and Counter Terrorism laws and $200 million set aside for costs to be incurred in the Royal Commission.
‘Reliable estimate’ of legal costs
CBA chief executive Ian Narev offered a degree of contrition in announcing the results.
“During this period [the six months to December 31], we have focused a great deal of effort on fixing our mistakes, and becoming a better bank,” Mr Narev said.
“We have taken a significant provision for regulatory and compliance costs, consistent with accounting standards.
“We have also taken a $375 million expense provision which we believe to be a reliable estimate of the civil penalty a court may impose in the AUSTRAC proceedings.
“We recognise, and regret, that these costs arise from our failure to meet some standards that we should have.”